A common question that people toiling in debt may have is what happens to their debts when they pass away? Unfortunately, they don’t always go away as a creditor can make a claim against one’s estate to collect an outstanding debt.
Now why would a creditor be so cold and calculating to try to collect a debt from a dead person? Chances are that the person has significant assets that are to be liquidated, or an insurance policy that will be cashed in, thus providing the money that would potentially settle a debt. Because of this, creditors are given significant powers to collect from estates, since the person who owed the debt is no longer alive.
For those who are found to be an executor of an estate (or appointed to be a personal representative) paying debts is a very common (and important) function. After all, paying debts and identifying proper creditors are two essential functions of probate. In fact, a creditor can file a claim against the estate through probate for unpaid mortgage payments, payments owed under a contract, civil court awards and even outstanding utility bills. Creditors can even contest the transfer of assets to heir and beneficiaries if there are outstanding debts.
If as an executor you believe that some creditors have brought improper claims or are not legitimate creditors, this is where the experience of a seasoned attorney can be helpful. It is an affront to your loved one’s memory to have their assets seized or passed to an entity that does not have a legitimate legal basis for collecting.